The victors’ in Spain’s general election appeared powerless to calm the
markets with fears that a lame-duck period stretching to Christmas could
deepen Spain’s problems.

Despite Mariano Rajoy’s conservative People’s Party winning an absolute majority and with it a strong mandate to impose tough reforms and further austerity, the markets failed to show confidence.

Instead Madrid’s stock market dropped 3 per cent on Monday and yield on the country’s 10-year bond rose by 12 basis points to 6.56 per cent, edging closer to the 7 per cent danger zone.

The new leader-elect of Spain, who will not be sworn in until mid-December, resisted pressure to disclose his plans for rescuing Spain from economic disaster, and made no public statement on Monday.

He has yet to name an economic minister and the team who will attempt to steer Spain out of deepening crisis where unemployment has reached 22 per cent and a second recession is looming.

Analysts had anticipated that Mr Rajoy would be quick to outline his plans and attempt to win confidence from jittery financial markets after only vague promises were made during the election campaign.

On the first day of what many Spanish newspapers described as “a new dawn” for Spain, Mr Rajoy held meetings at headquarters in central Madrid.

But it was left to other leading members of the PP to hint at the future.

Maria Dolores de Cospedal, the deputy leader of the People’s Party, acknowledged that Spain “can’t keep financing itself at 7 percent,” and called on assistance from Europe.

She called for an “agreement through a joint euro-region operational strategy to save and guarantee the solvency of our debt.”

Others focused on the need for swift co-operation between the outgoing socialists, who suffered a drubbing at the polls, garnering only 29 per cent of the vote against the PP’s 45 per cent share.

"There are extraordinary problems which demand that a holiday period between governments should not exist," said PP spokeswoman Soraya Sáenz de Santamaría, adding that the handover should be dealt with “swiftly and transparently” and that party politics should be put aside.

Miguel Arias Canete, the head of the People’s Party’s electoral committee, called on investors to allow “breathing space” to implement measures.

“We are sending a message that we are going to do what needs to be done, but they need to give us space to do that,” the former minister said in an interview on Es Radio, early Monday.

“Markets don’t understand the procedures of elections, so we need to be very convincing during these days and hope that they give us the breathing space to be able to put in place the necessary measures,” he said.

Economist Nicholas Spiro, of London-based Spiro Sovereign Strategy, warned that: "The fact that investors have to wait another month for Mr Rajoy's cabinet to take the reins only adds to the uncertainty."